Bitcoin can be a powerful tool for human rights and financial inclusion around the world.
Many people have strong opinions about Bitcoin. Some of these critiques are valid. But with Bitcoin adoption in Africa up 1200% this year and El Salvador declaring Bitcoin legal tender, it’s important to consider the positive case for Bitcoin. While reading, keep one thing in mind: not everyone lives the life you live. Consider Bitcoin use among Russian dissidents, Belarussian protestors, Venezuelan professors, Afghan women entrepreneurs, Nigerian feminists, and North Korean revolutionaries. At present, Bitcoin may have no utility for you, but you are not the only use case.
This article highlights three of Bitcoin’s features: inflation-hedging, censorship-resistance, and privacy.
Inflation-hedging. Between 2016 and 2019, the inflation rate of the Venezuelan bolivar was 54,000,000%. While the number is higher than anywhere else, the situation is not unique to Venezuela. Over 1 billion people live in countries with double-digit inflation, including Turkey, Nigeria, Lebanon, Zimbabwe, Argentina, Iran, and South Sudan. This phenomenon isn’t unique to countries with rapidly devaluing currencies—it’s just more noticeable. Almost every government-backed currency has a targeted positive inflation rate. The wealthy don't hold currency, but instead hold equities and real estate—and take on debt in devaluing currency to do so. The poor, by contrast, save in the devaluing currency.
Bitcoin’s software dictates that its supply is capped at 21 million. The global poor can hold whatever wealth they have in Bitcoin without worrying about that wealth being devalued as a result of increased supply. And Bitcoin is inclusive. To buy some, one only needs access to a phone or computer with an Internet connection, or visit a grocery store with a Bitcoin ATM; it is significantly harder for those who aren’t already socio-economically privileged to invest in stocks or get a bank account.
Censorship-resistance. Most monetary networks have one or more authorities who can deny anyone access to the network. Some can deny the ability to get on the network at all, while others can deny particular payments or payments for particular things or to particular people. When we’re using any of these payment networks, we need the permission of these authorities. And they can revoke that permission at any time, for any reason.
You might like that some financial transactions can be blocked. Perhaps you would be in favor of the government not clearing payments to gun manufacturers, or huge factory farms, or Amazon. But history has taught us that soon the shoe will be on the other foot, and then the government won’t be clearing payments to abortion providers, or to renewable energy providers, or to marijuana dispensaries. We might want a payment network that can’t discriminate no matter how the political winds are blowing. And we should certainly recognize that in some places, those in power are using it to punish those who oppose them. For example, Alexei Navalny uses, because Bitcoin has no centralized authority and so transactions are practically impossible to censor.
Privacy. What you spend your money on is an important indication of what you value. It can also be an important indication of what you need, or who you are. It’s nobody’s business but yours that you’re buying spironolactone or testosterone, progestin, head lice shampoo, hair growth products, or anything at all. But if you’re buying them with a credit card, there’s a record of your purchase. And it’s kept, and sold, and used for targeted ads. That’s uncomfortable to know.
It’s even more uncomfortable for people whose lives depend on being able to purchase things without their governments’ knowledge. Traditionally that meant using cash, but governments like China and India are taking steps to make cash purchases harder in order to incentivize digital payments that they can record and store. It’s not hard to see why Hong Kong protestors chose to purchase supplies with Bitcoin, as did people fleeing Iran and Lebanon. Nor is it hard to see why people donating to Ukrainian protest efforts use Bitcoin.
Conclusion. Bitcoin’s issuance policy helps those in countries with inflationary local currencies who lack access to other investments. Bitcoin’s censorship-resistance helps those whose governments would freeze their bank accounts or deny their payments, and those who want to buy things that the traditional payment networks don’t allow. And Bitcoin’s privacy helps those in authoritarian regimes and those who don’t want their purchases tracked by huge corporations.